London, October 10th, 2011 – From the survey results, it is clear that, for most respondents, sustainability is an important priority in the food and beverage industry, necessary to attract environmentally conscious customers, compete for major contracts and comply with governmental and international legislation. This is reflected by the fact that, on average, respondents expect to allocate 25% of their procurement budgets to sustainability initiatives over the next 12 months and anticipate an average cost saving of 8% of organizational expenditure as a result of these initiatives. In terms of supplier selection, the most important factors identified by respondents were reduction of energy consumption, effective minimization of waste and use of recyclable or reusable product components. Survey respondents also identified Canada, the UK and Germany to be the most promising markets for defense sustainability.
Sustainability management budgets are expected to rise over the next 12 months by an average of 9%
Food and beverage industry buyers’ sustainability management budgets are expected to rise over the next 12 months by an average of 9%. A total of 49% of respondents expect an increase in sustainability budgets, of which 19% of respondents expect budgets to increase by more than 25%. The increasing need to adopt sustainability, compliance with legislation, increase in operational costs and customer demand are considered important reasons for the expected increase in sustainability budgets. On average, respondents from supplier companies expect an increase of 8% in their sustainability budgets in 2011–2012. The desire to remain competitive, increase future profits, product innovations, increase in new business opportunities and implementation of effective waste and energy management systems are considered important drivers for the expected increase in sustainability budgets.
The food and beverage industry is confident about profitability in 2011–2012 due to the adoption of sustainability practices
Companies across the food and drinks industry expect an increase in profitability over the next year due to adoption of sustainability practices. Of food and drinks manufacturer industry respondents, 59% expect either a slight or substantial increase in profitability. Similarly, 46% of respondents from supplier companies anticipate either a slight or substantial increase in profitability. Cost savings, increasing shareholder expectations, optimal resource utilization, and energy efficiency are considered important sustainability catalysts. Companies are reducing overheads and production costs by the optimal utilization of resources in production processes. This in turn helps to reduce the cost of goods and enables them to make greater investment in research and development, upgrading equipment and capital improvements.
Demand for sustainable products and services expected to be high in Canada, the UK, and Germany
Overall, informed opinion among food and beverage companies identified ‘Canada’, ‘the US’, ‘the UK’ and ‘Germany’ as the markets with the strongest growth prospects for sustainable products and services in 2011–2012. Results show that 70% of buyer respondents identified Canada to be an important growth region, followed by the US, the UK and Singapore. These expectations are strongly influenced by government policy, with the Canadian government, for example, encouraging sustainable food production and consumption practices through the implementation of rules and regulations to ensure that food and beverage products are manufactured with reduced wastage and reduced carbon emissions.
In April 2011, The UK Food and Drink Federation encouraged food manufacturers and retailers to take appropriate steps to reduce waste and improve efficiency. The federation states that food manufacturers should try to encourage environmentally responsible attitudes throughout the supply chain through the promotion of responsible sourcing and consumption policies.
‘Strengthening competitive position’, ‘cost savings and operational efficiency’ and ‘managing corporate reputation’ are major drivers for adoption of sustainability practices
‘Strengthening competitive position’, ‘cost savings and operational efficiency’ and ‘managing corporate reputation’ are identified by respondents from both buyer and supplier companies when it comes to factors that influence the sustainability efforts of their organizations. Food and drinks manufacturers and suppliers identify ‘cost savings and operational efficiency’ as one of the important drivers that influence organizational sustainability practices. Being an environmentally sustainable company has inherent benefits for food and beverage companies as its raw materials are sourced from the natural environment. ‘Lack of budget ’, ‘lack of staff time or expertise’ and ‘organizational resistance to change’ are considered the primary barriers for effective implementation of sustainable practices by buyer respondents.
‘Reduction in energy consumption’ and ‘effective minimization of waste’ are the leading critical success factors for suppliers in 2011–2012
Buyer companies seek suppliers with programs in place to show ‘reduction of energy consumption’ and ‘effective minimization of waste’ and with the capacity to use ‘recyclable or reusable product components’. Efficient waste reduction programs may benefit the company by enabling it to utilize the same resource for an output that reduces operational and production costs. Buyer respondents advocate suppliers who have unified plans in place to reduce GHG emissions themselves. Suppliers who can contribute to a reduction of carbon footprint throughout the entire process of sourcing, manufacturing, transportation, and disposal are preferred.
Food and beverage companies intend to spend 25% of their procurement budgets on sustainability initiatives
On average, buyer companies operating in the food and beverage industry are planning to allocate 25% of their total procurement budgets for 2011–2012 towards sustainable products and services. A total of 23% of buyer respondents plan to allocate 10%–20% of their total procurement budgets towards sustainable products and services, whereas 16% of respondents plan to allocate over 50%. Increased investment is expected in lightweight packaging materials and usage of energy efficient facilities as they are considered the most important sustainable procurement areas across the buyer industry.
‘Email and newsletters’, ‘corporate and brand websites’ and ‘conferences and events’ to dominate future investment
‘Email and newsletters’, ‘corporate and brand websites’ and ‘conferences and events’ are expected to experience the strongest investment increase; conversely, ‘television and video’ and ‘webcasting’ are expected to record the lowest investment increase. Suppliers are increasing their investment in electronic media as it offers a greater ROI over traditional media. ‘Including sustainability as a section in corporate website’, giving ‘informal presentations’ and sending ‘educational marketing messages’ to the potential clientele are considered to be important steps to be taken by supplier companies to market their green credentials to clients in 2011–2012.
